Continuity

These consolidated financial statements have been prepared assuming that the company will continue as a going concern.

General principles for valuations

The annual accounts were drawn up in accordance with the generally accepted principles for financial reporting in the Netherlands and meet the legal provisions regarding the annual accounts as recorded in Part 9, Book 2 of the Netherlands Civil Code (BW). The principles for the valuation of assets and liabilities were applied consistently during the previous and current year. The principles for valuation and result determination apply to both the consolidated and company annual accounts.

Shareholder structure

The RAI Association has a 75 per cent interest in RAI Holding B.V. The remaining 25 per cent of the shares are held by the Municipality of Amsterdam.

Principles of consolidation

The financial data of RAI Holding B.V. and all its group companies are consolidated. Group companies are participations over which RAI Holding B.V. has decisive control. The other participating interests are not consolidated.

The financial information of companies acquired during the year under review is consolidated from the moment that RAI Holding B.V. acquires decisive control over the companies concerned until the moment this control is terminated. Transactions between companies that are consolidated are eliminated.

The company owns 100% of the shares in the following participations: RAI Amsterdam B.V., Amsterdam; Arfora B.V., Amsterdam.

These group companies include the results of the following indirect participations (100%): RAI Solar Energy B.V., Amsterdam; Amsterdam RAI Catering B.V., Amsterdam; RAI USA, Inc., Delaware; Rui Ang Exhibition and Convention Co., Ltd., Shanghai; RAI TURKEY ULUSLARARASI FUARCILIK VE GOSTERI HIZMETLERI ITHALAT IHRACAT TICARET LIMITED SIRKETI, Istanbul. The company in Turkey was established in 2016. In addition, the result of the following indirect participation (50%): IBEX LLC, Maine USA, was also included.

Foreign currency

The functional currency is the euro. Assets and liabilities denominated in foreign currency are converted into euros at the exchange rate valid on the date of the balance sheet. Transactions in foreign currencies are converted at the exchange rates at the time of the transaction. The exchange difference that results from the denomination is included in the profit and loss account.

Use of estimates

In order to help determine the included figures when drawing up the annual accounts, the management of RAI Holding B.V. makes certain estimates and suppositions in accordance with the generally accepted principles of financial reporting. The factual results can deviate from these estimates.

The estimates and underlying suppositions are regularly evaluated. Revisions of estimates are recorded in the period in which the estimate is revised and in future periods that are affected by the revision.

On 1 November 2016 there was a change in estimate regarding the economic life of the activated long-term land lease from 2018 to 2066. As the economic life was extended, the future depreciation period was adjusted accordingly. As a result of the change in estimate, the result before taxes over the reporting year 2016 is €34,348 higher. It is expected that the result before taxes will be approximately €206,087 higher due to the change in estimate in the coming reporting years.

Financial tools

Financial tools include both primary financial tools such as receivables or debts, and financial derivatives. For the principles of the primary financial tools, see the description per balance sheet item.

RAI Holding B.V. applies hedge-accounting based on documentation for each individual hedge relation, and documents how the hedge relations fit in with the goals of the risk management, hedge strategy and the expectations regarding the effectiveness of the hedge.

The effective part of the financial derivatives assigned to cost-price hedge-accounting is valuated at cost value and the ineffective part is valuated at fair value. The valuation changes of the fair value of the ineffective part are immediately processed in the profit and loss account.

Principles for the valuation of assets and liabilities

Assets and liabilities are stated at their nominal value, unless otherwise indicated in the separate items in the explanatory notes.

Intangible fixed assets

Externally obtained exhibition titles are valued at cost price or market value if lower, and are depreciated over their economic life, which is assumed to be 20 years at most.

The economic life for the IBEX exhibition title is assumed to be 15 years at most.

Software is valued at historic cost and is depreciated over its economic life, which is assumed to be ten years at most. Operating rights are valued at acquisition price and depreciated annually based on the term of these rights.

Tangible fixed assets

Tangible fixed assets are valued at their acquisition price, minus straight-line depreciation based on their economic life and minus any special depreciation.

Maintenance costs for buildings owned are immediately charged to the results, or entered as assets and depreciated if the asset criteria allow it. The depreciation calculation takes the residual value into account. This residual value is expected to be nil in all cases.

Financial fixed assets

Participating interests over which significant control is exercised over their business and financial policy are stated at their net asset value determined on the basis of the accounting principles of RAI Holding B.V.

Participating interests over which no significant control is exercised are stated at the acquisition price or current value if lower. Receivables from and loans to participating interests as well as other receivables are stated at the fair value in the first processing, and then valued at the amortised cost minus the necessary provisions.

Special depreciation of fixed assets

An evaluation is made each year to see whether there are any indications that intangible, tangible or financial fixed assets are subject to special depreciation. Special depreciations apply when the balance sheet value of the asset is higher than the realisable value. If there is a case of special depreciation, then the relevant asset is devalued to the realisable value. The loss is immediately processed as expense in the profit and loss accounts.

Receivables

Receivables are stated at the fair value in the first processing, and then valued at the amortised cost, which is the same as the nominal value minus any provisions for doubtful debts. These provisions are determined based on an individual assessment of the receivables.

The receivables have an expected term of up to one year, unless stated otherwise.

Stock

The stock mainly involves food & beverage products of which the valuation is determined at acquisition costs, minus a provision for obsolescence, where necessary.

Securities

Securities are stated at their cost or market value on the balance sheet date, whichever is the lower. The market value is in principle equal to the value quoted on the stock exchange. If a sale is expected in the short term, the directly realisable value is considered the market value.

Liquidities

Liquidities are at the disposal of the company.

Provisions

Provisions are included for all rightful enforceable or factual obligations resulting from an event before the balance sheet date, which are expected to require an export of capital for the fulfilment thereof and of which the scope can be reliably estimated.

A provision for long-service payments is included based on the valid long-service regulations per balance sheet date, taking into account the likelihood of continued employment, future labour cost developments and discount provisions.

A provision is included for bonus schemes and participations based on relevant performance schemes. This provision is included under current liabilities.

Pension provision

The company has two active pension schemes for its employees. Employees who started working for the company before 1 January 2013 are subject to a pension provision that qualifies as a defined benefit plan, in which the defined pension payments are based on average pay. This pension scheme has been placed with a pension insurer, and is processed in the financial statement as a defined contribution scheme due to the fact that the obligations for realising this pension scheme are entirely reinsured.

Employees who started working for the company since 1 January 2013 or those who have voluntary switched to the new pension scheme are subject to a premium scheme with the nature of a defined contribution agreement in which the company obligations are limited to making an annual contribution to the insurance company. Future payable contributions will partly depend on the development of the employment conditions and the yield on the invested contributions achieved by the insurer.

Long-term liabilities

Long-term liabilities include debts with a remaining term of over one year. These debts are stated at the fair value in the first processing, and then valued at the amortised cost.

Short-term liabilities

Short-term liabilities have an expected term of less than one year. A provision is included for bonus schemes and participations based on relevant performance schemes. There is also a provision included for contractual agreements with employees.

Tax deferrals

Temporary differences between the determination of profit for commercial and tax purposes are stated at their nominal value in the balance sheet as a tax deferral or asset. Deferred claims for corporation tax on account of tax-deductible losses are valued at the future tax rate known on the balance sheet date in so far as it can reasonably be expected that the claims are realisable.

RAI Holding B.V. is the leading company of a group that is treated as a single entity for tax purposes. The other members of the group are: RAI Amsterdam B.V., RAI Solar Energy B.V., Amsterdam RAI Catering B.V. and Arfora B.V.

Principles for determination of results

Revenue

The financial statements have been prepared on the basis of the historical cost convention. Revenue and expenses are accounted for in the period in which the goods or services are supplied. For exhibitions and events this is the period in which the event takes place. Profits are accounted for in that period. Losses and risks that originated before the end of the financial year are processed if and insofar as they became known before the annual accounts were drawn up.

Depreciation

The depreciation on tangible fixed assets is calculated on a linear basis by reference to the expected economic life.

The applied depreciation rates are between 2% and 20%. The depreciation of the intangible fixed assets is related to the acquisition value, and ranges between 5% and 20%. Possible residual values of tangible and/or intangible fixed assets are not taken into account.

Financial revenue and expenditure

The financial revenue and expenditure involve the exchange differences, interest revenue and costs attributable to the period concerned.

Participating interest results

The participating interest results concern the share of the company in the results of the net asset value of the participating interests. The share that the company is due is stated as the result of a specific participating interest in the participating interest results.

Corporation tax

The corporation tax is calculated on the commercial pre-tax profit, taking into account the tax facilities. The mutation in the provision for deferred corporation tax is taken into account in the calculations.

Cash flow statement

The cash flow statement has been drawn up in accordance with the indirect method. The resources in the cash flow statement consist of liquidities and bank credits.

Investments in exhibition titles are depreciated over a maximum period of 20 years. An impairment test on titles that were externally acquired in the past is performed annually. Software is depreciated over a period of ten years at most, calculated from the time it is first used.

The ‘other’ category primarily concerns the use of a lounge in the Amsterdam ArenA. These rights will be depreciated until the year 2026. Disinvestments are related to assets that are no longer used.

1.1.2. Tangible fixed assets

Tangible fixed assets

Amounts x €1,000

Tangible fixed assets

Buildings,
installations
and land

Inventory

Work in
progress

Total

Cost as on 1-1-2016

310,936

27,806

8,686

347,428

Investments

14,923

955

2,392

18,270

Finished work in progress

7,863

102

‑7,965

‑

Disinvestments

‑2,581

‑441

‑

‑3,022

Cost as on 31-12-2016

331,141

28,422

3,113

362,676

Depreciation and amortisation as on 1-1-2016

162,298

18,848

65

181,211

Depreciation

9,975

2,944

‑65

12,854

Disinvestments

‑1,735

‑441

‑

‑2,176

Depreciation and amortisation as on 31-12-2016

170,538

21,351

‑0

191,889

Book value as on 1-1-2016

148,638

8,958

8,621

166,217

Book value as on 31-12-2016

160,603

7,071

3,113

170,787

Buildings and land are depreciated over a period of 50 years, the Convention Centre over a period of 20 years, and installations over a period of 10 to 20 years. The other fixed assets are depreciated over a period of five to 20 years.

The book value of land subject to a long lease until 2028 on 31 December 2016 is €3,254,614 (2015: €3,529,652). Disinvestments are related to fixed assets that are no longer used.

1.1.3. Financial fixed assets

Financial fixed assets

Amounts x €1,000

Financial fixed assets

Total

Balance as on 1-1-2016

1,134

Other changes

‑

Balance as on 31-12-2016

1,134

The financial fixed assets refer to a capital interest in Stadion Amsterdam CV of 1/9 share of the limited capital. The valuation of this capital interest is valued at the acquisition price or current value if lower.

1.1.4. Current assets, receivables

Current assets, receivables

Amounts x €1,000

Current assets, receivables

2016

2015

Trade receivables

14,233

18,343

Provision for doubtful debts

‑1,833

‑1,467

12,400

16,876

Other receivables

4,315

4,773

Corporation tax

136

‑

Accrued assets

5,786

7,513

22,637

29,162

The other receivables include, among other items, yet to be billed invoices to an amount of €2,918,384 (2015: €3,612,080) and receivables related to the pension provision to an amount of €717,141 (2015: €702,004).

The accrued assets include, among other items, costs paid in advance to the amount of €315,450 (2015: €1,948,423) and paid personnel costs for future exhibitions to an amount of €4,877,950 (2015: €5,563,838).

1.1.5. Shareholder equity

For an explanation of the mutations in the shareholder equity in 2016 and 2015, see the notes on the company annual accounts of RAI Holding B.V. (see 4.1.2.). There were no direct changes in the shareholder equity during the financial year.

1.1.6. Provisions

Provisions

Amounts x €1,000

Provisions

Tax
deferral

Other

Total

Balance as on 1-1-2016

508

1,600

2,108

Allocation

396

237

634

Withdrawal

‑369

‑331

‑701

Balance as on 31-12-2016

535

1,506

2,041

The passive deferred tax consists of the differences between commercial and tax-based valuation.

The other provisions mainly involve individual redundancies, a provision for long-service payments and other personnel-related provisions. The above provisions, with the exception of the individual redundancies, are mainly of a long-term nature.

1.1.7. Long-term liabilities

Long-term liabilities

Amounts x €1,000

Long-term liabilities

2016

2015

Loans Deutsche Bank AG

26,000

26,000

Loan Coöperatieve Rabobank Amsterdam U.A.

26,000

26,000

Loan Triodos Bank

253

268

Loan Klimaatfonds Amsterdam

100

100

Other liabilities

9,042

7,583

61,395

59,951

Overview of long-term loans

As on 31 December 2016, amounts x €1,000

Overview of long-term loans

Principle

Payment in
book year

Amount
remaining

Loan Deutsche Bank AG

26,000

‑

26,000

Loan Coöperatieve Rabobank Amsterdam U.A.

26,000

‑

26,000

Loan Triodos Bank

283

15

268

Loan Klimaatfonds Amsterdam

100

‑

100

Other liabilities

9,974

154

9,820

62,357

169

62,188

Minus short-term part of long-term liabilities

793

61,395

In 2013 the RAI entered into a credit agreement with Deutsche Bank AG and Coöperatieve Rabobank Amsterdam U.A. This credit agreement comprises an overdraft facility of €30 million as well as two loans totalling €52 million (50% Deutsche Bank AG and 50% Coöperatieve Rabobank Amsterdam U.A.) until 2020.

In 2016 the RAI established an additional credit facility with Deutsche Bank AG and Coöperatieve Rabobank Amsterdam U.A., consisting of a current account of US$ 6.7 million at Coöperatieve Rabobank Amsterdam U.A. As part of this agreement, it was agreed that the current account of Coöperatieve Rabobank Amsterdam U.A. is reduced by €3 million and the current account of Deutsche Bank AG is increased by €3 million. This way both banks are a 50% credit provider. The current account of US$ runs until 2020.

The rate of interest on the loans is Euribor + 1.70%.

In 2013 the RAI entered into an interest swap agreement, based on which RAI Holding B.V. pays an interest rate of 1.54% over an amount of €48 million.

The business premises at Europaplein have been mortgaged as security for the repayment of the long-term debts and overdraft facility.

A credit agreement with the Triodos Bank for the financing of solar panels was concluded in 2014. It consists of a loan of €0.29 million for the period until 1 January 2034. The loan is being repaid in 79 quarterly terms, starting 1 July 2014. The interest rate is 3.5% on an annual basis for the period until 17 January 2026.

A credit agreement to finance solar panels was concluded with the Amsterdam Investment Fund of the Municipality of Amsterdam in 2014. It consists of a loan of €0.1 million for the period until 5 March 2029. The loan will be repaid at the latest by 5 March 2029 and the interest rate is 0%.

The other long-term debts consist of a lump-sum payment received in 1988 from the Municipality of Amsterdam for the operating losses of the Convention Centre in the period until 2038. This lump-sum payment was acquired in the past for an interest of 7.46%. This lump-sum payment is mainly of a long-term nature. The release benefits the operational costs. The annual interest increase is at the expense of the financial revenue and expenditure.

Of the long-term liabilities, a total of €3.3 million has a term of over five years.

1.1.8. Short-term liabilities

Short-term liabilities

Amounts x €1,000

Short-term liabilities

2016

2015

Bank overdrafts

10,200

10,771

Short-term part of long-term liabilities

793

778

Debts to shareholders

670

‑

Advance payments

20,284

22,686

Debts to suppliers

5,694

6,941

Corporation tax

‑

359

Other taxes and social security contributions

1,876

426

Accruals and deferred income

15,089

11,068

54,606

53,029

The accruals and deferred income largely consist of receivable invoices for costs made to an amount of €6,099,937 (2015: €7,615,345) and accruals and deferred income related to personnel to an amount of €3,262,482 (2015: €3,169,456).

Off-balance sheet information

There are no contractual commitments under tenancy agreements (2015:none).

No bank guarantees were issued (2015:none).

There are operating lease commitments for 44 cars (2015:46).At the end of the financial year the contractual commitments totalled €910,091(2015:€810,719),of which€360,041is due within one year.The remainder is due within five years.

A total of€588,686(2015:€634,593)in lease payments was made in 2016.

In2017an agreement was reached with the Municipality of Amsterdam, Land Lease and Land Issuance and Development department on an advanced change of the long-term land lease agreement. The new agreementhas a term of 50 years until 30 October 2066. The available part of the capitalised acquired long-term land lease as of 1 November 2016 will be depreciated over the new term of 50 years. The total liability for long-term land lease (until 2066) is €12,976,314 of which an amount of €259,526 is due within one year. An amount of €1,297,631 is due within five years. The remainder involves the period 2022 to2066.

RAI Holding is the leading company of a group that is treated as a single entity for corporation and turnover tax purposes. The other members of the group are: RAI Amsterdam, RAI Solar Energy, Amsterdam RAI Catering and Arfora B.V. Each company is severally liable for the liabilities of the fiscal entity.

Liabilities were incurred of € 471,260 related to the construction of Strandzuid city beach.

Financial tools

The risks associated with the financial tools are clarified below.

Credit risk

In order to manage the credit risk, exposure is constantly monitored and acted upon. There was no major concentration of credit risks at the end of the financial year. Credit risks relate to debtors and other short-term receivables. Sufficient provisions were included accordingly.

Currency risk

There are no substantial currency risks as the operational cash flows and financing activities mainly take place in euros.

Interest risk

Interest risks mainly concern long-term loans. Amsterdam RAI B.V. has interest rate swap contracts to cover interest risks. In order to fix the interest rates, interest rate swaps amounting to €48 million at the end of 2016 were concluded in 2013 for the period until 2020. RAI Amsterdam B.V. pays an interest rate of 1.54% on the interest swap with Deutsche Bank AG/Coöperatieve Rabobank Amsterdam U.A. A variable interest rate of three months Euribor plus an individual surcharge is paid on the bank overdrafts. The amounts covered by the interest swaps are smaller than or equal to the outstanding principle of the loans from Deutsche Bank AG/Coöperatieve Rabobank Amsterdam U.A. On 31 December 2016, the interest swaps had a fair value of minus €2,696,262 (2015: minus €2,969,000). The nominal value will be reduced to zero over the remaining interest swap period (until 2020).

Notes on the consolidated profit and loss accounts 2016

2.1.1. Turnover

Turnover

Amounts x €1,000

Turnover

2016

2015

By geographical area

The Netherlands

116,143

117,478

Other countries

4,059

8,673

120,202

126,151

By activity

Exhibitions and events

50,236

56,871

Letting to third parties

19,787

18,102

Catering

14,461

15,547

Parking

5,036

5,898

Hotel commissions

2,555

3,285

Facility Services

26,130

24,334

Other

1,997

2,114

120,202

126,151

2.1.2. Costs of outsourced work or other external costs

Costs of outsourced work or other external costs

Amounts x €1,000

Costs of outsourced work or other external costs

2016

2015

Exhibitions and events

16,894

27,012

Letting to third parties

2,401

1,743

Outsourcing costs

7,131

6,634

Catering

5,179

4,791

Personnel

7,487

7,253

Marketing costs

3,300

5,995

Other

4,692

5,186

47,084

58,614

2.1.3. Personnel costs

The salary paid to (former) Board members (3) in 2016 totalled €660,073.50. In 2015, the Board of RAI Holding B.V. consisted of one person. Based on Article 383 section 1 book 2 BW from the Netherlands Civil Code, the salary paid that year is therefore not included in this statement.

The salary paid to Supervisory Board members (average of 4) amounted to €104,125 (in 2015: €106,682, average of 4).

Average number of employees

In FTE, working for the group

Average number of employees

2016

2015

In the Netherlands

374

375

Personnel, by discipline

Percentage / FTE (balance at the end of the year)

Personnel, by discipline

2016

2015

BY DISCIPLINE

Commercial

51%

50%

Operational

36%

40%

Financial/staff

13%

10%

Total

100%

100%

2.1.4. Depreciation on intangible and tangible fixed assets

The depreciation on intangible and tangible fixed assets consists of €14.1 million in regular depreciations and €0.8 in book losses on disinvested tangible fixed assets.

2.1.5. Other operational costs

Other operational costs

Amounts x €1,000

Other operational costs

2016

2015

Building costs

9,552

7,809

Agency costs

694

715

Automation costs

4,404

4,042

Consultancy costs

2,490

2,067

Travel, accommodation and representation costs

916

898

Other personnel costs

1,253

1,248

Other general operational costs

409

255

19,718

17,034

Auditors’ costs
In accordance with Article 382a Book 2 of the Netherlands Civil Code, an amount of €73,260 (2015: €76,550) is due to BDO Audit & Assurance B.V., of which €70,000 (2015: €70,000) relates to the annual audit, and €3,260 to other audit assignments.

2.1.6. Interest expenses and similar costs

Interest expenses and similar costs

Amounts x €1,000

Interest expenses and similar costs

2016

2015

Interest expenses

2,592

3,260

2.1.7. Taxes

Taxes

Amounts x €1,000

Taxes

2016

2015

Deferred corporate tax

‑369

‑834

Acute corporate tax current book year

2,133

2,222

Corporate tax previous years

36

81

Tax charged in the profit and loss account

1,800

1,469

The effective taxation rate over 2016 is 26.2% (2015: 25.8%) which is in line with the generally applicable tax rate in the Netherlands.

4.1. Company balance sheet (before appropriation of results)

Company balance sheet

Before appropriation of results, amounts x €1,000

Company balance sheet

ASSETS

ref.

2016

2015

Fixed assets

Financial fixed assets

4.1.1.

113,092

108,044

113,092

108,044

LIABILITIES

Shareholder equity

4.1.2.

Issued capital

2,730

2,730

Share premium

22,006

22,006

Other reserves

58,070

57,733

Unappropriated profit

5,048

4,214

87,854

86,683

Debts

Debts to group companies

4.1.3.

25,238

21,361

113,092

108,044

5.1. Company profit and loss account

Company profit and loss account

Amounts x €1,000

Company profit and loss account

2016

2015

Company result after taxes

‑

‑

Result from participating interest after taxes

5,048

4,214

Net result

5,048

4,214

The corporate profit and loss account has been drawn up in accordance with Article 402 of Book 2 of the Netherlands Civil Code.

The financial data of RAI Holding B.V. is included in the consolidated annual account. As a result, the profit and loss account of RAI Holding B.V. only states the share in profits after taxation of participating interests and the other result after taxes, in accordance with Article 402 of Book 9 of the Netherlands Civil Code.

Notes on the company balance sheet as on 31 December 2016

4.1.1. Financial fixed assets

Financial fixed assets

Amounts x €1,000

Financial fixed assets

Participation in
group companies

Balance as on 1-1-2016

108,044

Result

5,048

Balance as on 31-12-2016

113,092

The company owns 100 percent (unless otherwise stated) of the shares in the following major participations: RAI Amsterdam B.V., Amsterdam; Arfora B.V., Amsterdam.

The authorised capital is €13,650,000, divided into 225,000 ordinary ‘A’ shares and 75,000 ordinary ‘B’ shares, each having a nominal value of €45.50. Of these, 45,000 ‘A’ shares and 15,000 ‘B’ shares have been issued and fully paid up.

4.1.3. Debts to group companies

Debts to group companies

Amounts x €1,000

Debts to group companies

Debts to group companies

Balance as on 1-1-2016

21,361

Result

3,877

Balance as on 31-12-2016

25,238

As was the case last year, no interest is charged on debts to group companies.

Personnel

As was the case in 2015, the company did not employ any staff in 2016.

Off-balance sheet information

Letters of liability in accordance with Article 403 of Book 2 of the Netherlands Civil Code have been issued and deposited for the participating interests in RAI Amsterdam B.V., RAI Solar Energy B.V. and Amsterdam RAI Catering B.V.